Sheela Foam Limited Just Beat Revenue Estimates By 5.9%

Last week, you might have seen that Sheela Foam Limited (NSE:SFL) released its annual result to the market. The early response was not positive, with shares down 2.5% to ₹906 in the past week. Results overall were respectable, with statutory earnings of ₹17.66 per share roughly in line with what the analysts had forecast. Revenues of ₹31b came in 5.9% ahead of analyst predictions. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Sheela Foam

Following the latest results, Sheela Foam's three analysts are now forecasting revenues of ₹37.6b in 2025. This would be a sizeable 21% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 35% to ₹22.60. In the lead-up to this report, the analysts had been modelling revenues of ₹37.6b and earnings per share (EPS) of ₹25.33 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target fell 13% to ₹1,062, with the analysts clearly linking lower forecast earnings to the performance of the stock price. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Sheela Foam, with the most bullish analyst valuing it at ₹1,150 and the most bearish at ₹1,015 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Sheela Foam's growth to accelerate, with the forecast 21% annualised growth to the end of 2025 ranking favourably alongside historical growth of 8.6% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Sheela Foam is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sheela Foam. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Sheela Foam's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Sheela Foam going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Sheela Foam (at least 2 which shouldn't be ignored) , and understanding these should be part of your investment process.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.